Illinois Pension Fix Halted While Unions Pursue Challenge

May 15 (Bloomberg) -- Illinois government workers won a
temporary halt to a 2013 law passed to fix the state’s $100
billion pension shortfall while they fight it in court.

The law would reduce cost-of-living adjustments and raise
the retirement age for workers who are now 45 or younger. The
unions have sued Illinois Governor Pat Quinn, a Democrat, and
other officials, contending the reductions are barred by the
state’s constitution.

Circuit Court Judge John Belz in Springfield, the state
capital, yesterday stopped the scheduled June 1 implementation
of the law pending a final decision on whether the benefit cuts
in the measure are permissible.

Illinois has the most underfunded pension system in the
nation and led U.S. states in losing ground every year from 2007
to 2012 in socking away enough assets to pay retired workers. It
was the most-populous of five states, including Kentucky, North
Dakota, Oregon and Vermont, where pension-funding ratios fell at
least 21 percentage points during those years, according to data
compiled by Bloomberg.

Belz’s order will hurt taxpayers, Natalie Bauer, a
spokeswoman for Illinois’ Democratic attorney general, Lisa
Madigan, said in a statement.

“The goal of the pension reform law is to stabilize the
pension systems,” she said. “Unfortunately, this decision will
likely further burden the systems.”

The halt is “an important first step in our efforts to
overturn this unfair, unconstitutional law and protect
retirement security,” Michael T. Carrigan, president of the
Illinois AFL-CIO, said in statement.